Archives for June 28, 2019

Arlington Acquires Riverpoint Medical

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Arlington Capital Partners has acquired Riverpoint Medical. The investment in Riverpoint marks the first transaction for Arlington’s $1.7 billion fifth fund, which closed earlier this week.

Riverpoint Medical is a developer, designer, and manufacturer of medical devices focused on bio-medical textile technologies. The company specializes in bio-absorbable and non-absorbable sutures for the surgical and animal health markets. Riverpoint is also a provider of cordless LED surgical headlights and brachytherapy products for the oncology market. Brachytherapy is a procedure that involves placing radioactive material inside a body for the treatment of cancer. The company, led by CEO Pat Ferguson, was founded in 2008 by the Ferguson family and is headquartered in Portland, OR (www.rpmed.com).

Riverpoint’s founders and senior management have all made substantial investments in the company in partnership with Arlington. “We chose to partner with Arlington because of its long track record of success investing in, and scaling, medical device manufacturers,” said Mr. Ferguson. “We are extremely pleased to work together with Arlington to take Riverpoint to the next level of growth as Arlington shares our vision for expanding Riverpoint’s capabilities to better serve our customers and employees. Arlington’s ability to provide significant strategic and capital support is differentiated and will further enable Riverpoint to expand our offerings to our clients, increase our manufacturing capacity, and most importantly, help enhance surgical outcomes.”

“Arlington is thrilled to partner with the Riverpoint team to continue building a leading manufacturer of advanced textile-based medical devices,” said Matt Altman, a managing partner at Arlington. “Riverpoint’s ability to develop innovative technologies coupled with its unique manufacturing processes provide a strong platform to accelerate growth in large addressable markets. Our investment in Riverpoint continues Arlington’s history of building differentiated, high-growth medical device manufacturers in partnership with company founders and existing senior management.”

Arlington invests in buyouts and recapitalizations of companies valued from $50 million to $500 million that are active in government services and technology; aerospace and defense; healthcare; and business services and software.

“We have been very impressed with the company’s ability to capitalize on the growth trends in the sports medicine and animal health markets. We believe that Arlington can provide the strategic support and investments necessary to accelerate this exciting platform,” said Gordon Auduong, a vice president of Arlington.

Arlington was founded in 1999 and has completed over 90 acquisitions since its inception. The firm is based in Chevy Chase, MD (www.arlingtoncap.com).

© 2019 Private Equity Professional | June 28, 2019

Wind Point Adds VersaPet to Pestell

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Pestell Group, a portfolio company of Wind Point Partners, has acquired VersaPet, a manufacturer of private label and branded cat litter products. Wind Point acquired Pestell in partnership with consumer packaged goods executive Matt Miller in June 2018.

Pestell operates through two business units: Pestell Minerals and Ingredients (PMI), a distributor of animal feed minerals and ingredients for a variety of livestock; and Pestell Pet Products (PET), a full-line manufacturer of branded and private label cat litter and small animal bedding products. Both PMI and PET operate out of shared warehousing and manufacturing space near Toronto in New Hamburg, ON. Pestell also maintains 15 third-party warehouses across North America for its animal feed products business (www.pestell.com).The buy of VersaPet will increase PET’s overall capacity for cat litter production and will allow VersaPet to sell products from the broader PET portfolio, including paper-based animal litter, animal bedding, pet treats, and dental chews. VersaPet, led by CEO Elliott Wahle, was founded in 2009 and is headquartered in Toronto (www.versapet.com).

“VersaPet has achieved substantial growth, and we believe that the combination with Pestell will serve as a catalyst for even greater growth as the two businesses leverage their respective customer bases,” said Paul Peterson, a managing director with Wind Point.

The buy of VersaPet is the third add-on acquisition for Pestell under Wind Point ownership. The two earlier acquisitions were Targeted Pet Treats (www.targetedpettreats.com), a Warren, PA-based contract manufacturer of dental treats and chews for pets, in December 2018; and BPV Environmental (www.bpvenvironmental.com), a Byron Center, MI-based maker of paper-based animal litter and small animal bedding, in September 2018.

Wind Point invests from $50 million to $100 million in companies with EBITDAs of at least $10 million. Industries of interest include business services, consumer products and industrial products. In June 2017, Wind Point held a final closing of its eighth fund, Wind Point Partners VIII LP, with $985 million of capital commitments. The fund exceeded its initial hard cap of $750 million and is the largest fund closing in Wind Point’s history. The firm was founded in 1984 and is based in Chicago (www.wppartners.com).

Antares Capital, BMO Sponsor Finance and PennantPark led the debt financing for the transaction. Kirkland & Ellis served as legal counsel to Pestell.

© 2019 Private Equity Professional | June 28, 2019

Lariat Sells Offen Petroleum to Court Square

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Lariat Partners has sold Offen Petroleum, one of the largest fuel distributors in the Western US, to Court Square Capital Partners.

Offen Petroleum is a provider of fuel, lubricants, and logistics services in Colorado and the Rocky Mountain region. The company distributes over 1 billion gallons of motor fuel annually and serves as both a branded and unbranded wholesale motor fuel distributor in 14 Rocky Mountain West states.  In addition to motor fuels, Offen also sells lubricant products used in the commercial, industrial, and passenger car segments, as well as diesel exhaust fluids used in emission controls. The company is headquartered near Denver in Commerce City, CO (www.offenpetro.com).

Lariat first invested in Offen in December 2017. During the term of its ownership, the company doubled the number of gallons distributed annually and significantly grew its earnings. Lariat completed two add-on acquisitions for Offen with the buys of Overland Petroleum, a St. George, UT-based fuel distributor, in September 2018; and Allied Energy, a Phoenix, AZ-based fuel distributor, in May 2019.

“Our partnership with Lariat was outstanding and extremely beneficial for our company,” said Bill Gallagher, founder and chief executive officer of Offen. “Together, we have continued to strengthen Offen in order to accelerate our organic growth while simultaneously executing strategic acquisitions across our core geographies.  We are evaluating a robust pipeline of strategic add-on opportunities and our larger scale has further opened the doors to new organic growth prospects. I appreciated my relationship with Lariat, and I look forward to working with the Court Square team as we build upon Offen’s already strong performance.”

“When we invested in Offen, we not only invested in the company but in Bill and his entire management team. It was a strong company with long-standing customer relationships, and we knew it had tremendous future potential.  Working together we were able to unleash that potential and with additional investment it will continue to expand its geographic reach and serve its customers extremely well,” said Jay Coughlon, a managing partner and co-founder of Lariat Partners and who lead the Offen transaction.

Lariat invests in lower middle market companies that have EBITDA of $2 million to $20 million. The firm targets companies across several industries including consumer products, energy and environmental services, food and agribusiness, healthcare services, marine services, safety products and services, and specialty distribution. The firm was founded in January 2013 and is based in Denver (www.lariatpartners.net).

Court Square, the buyer of Offen, invests in middle market companies that have enterprise values of $150 million to $1.5 billion. Sectors of interest include business services, general industrials, healthcare, and technology/telecommunications. The firm is based in New York (www.courtsquare.com).

Stephens Inc. was the financial advisor to Offen Petroleum. KeyBanc Capital Markets served as lead arranger on the financing to support the transaction.

© 2019 Private Equity Professional | June 28, 2019

Incline Acquires Brown & Joseph

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Incline Equity Partners has acquired Brown & Joseph, a provider of commercial accounts receivable management services, from LaSalle Capital which first invested in the company in March 2018.

Brown & Joseph specializes in business-to-business third-party collection services while also providing first-party collections and insurance premium audits. The company is led by CEO Mark Schabel and is headquartered near Chicago in Itasca, IL (www.brownandjoseph.com).

“Working with Incline provides the opportunity to continue to achieve the meaningful growth we have experienced so far while expanding our capabilities to serve existing and new customers,” said Mr. Schabel. “Incline brings the resources and knowledge needed to tackle strategic initiatives like adding new service lines for existing customers, developing an approach to enter new markets and pursuing add-on acquisitions.”

“This is a sector we know well from an earlier investment we made in Receivable Management Services Corporation, a global supplier of recovery services,” said Leon Rubinov, a senior partner with Incline. “We plan to leverage our prior experience to support further growth at the company. We are excited to back an impressive management team that has a strong track record of success.”

Incline Equity Partners invests in lower middle-market growth companies that have enterprise values of $25 million to $300 million. Sectors of interest include value-added distribution, specialized light manufacturing, and business services. Incline was formed in 2011 and is based in Pittsburgh (www.inclineequity.com).

LaSalle Capital makes control investments of $10 million to $20 million in companies with revenues from $20 million to $100 million and EBITDA greater than $3 million. Sectors of specific interest include food and beverage and technology-enabled business services. LaSalle Capital is based in Chicago (www.lasallecapitalgroup.com).

According to a source familiar with this transaction, Twin Brook Capital Partners, the middle market direct lending subsidiary of Angelo Gordon, served as administrative agent on financing to support Incline’s buy of Brown & Joseph. Twin Brook targets senior financing opportunities up to $200 million, with hold sizes across the platform ranging from $25 million up to $150 million. Twin Brook also makes opportunistic investments in second lien, mezzanine, and equity co-investments. Earlier this month, Angelo Gordon closed AG Direct Lending Fund III LP with $2.75 billion in equity commitments. The new fund, which is managed by Twin Brook, closed above its $2 billion target and is the firm’s largest direct lending fund to date.

© 2019 Private Equity Professional | June 28, 2019